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TRID AND WHAT IT MEANS FOR HOMEBUYERS

September 22, 2015

Beginning Oct. 3rd, homebuyers will benefit from new legislation courtesy of the Consumer Financial Protection Bureau (CFPB) that will make the mortgage process quicker, more transparent and easier to understand.

The act, the TILA-RESPA Integrated Disclosure (TRID) Rule, combines facets of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) to enforce new regulations that will solve many of the problems homeowners have reported occurring during the closing process.

Once in effect, TRID will require lenders to provide you with two forms: the Loan Estimate Form and the Closing Disclosure Form, both of which will replace existing forms to simplify the process.

The Loan Estimate Form will give you the key details of the prospective loan, including terms of the loan, projected payments and closing costs, and a means of comparing the loan with other loans. A loan estimate must be given to you no more than three business days after you submitted the initial loan application. Lenders also cannot charge you any fees (save for credit report fees) until you decide to proceed with the loan, a decision you are given 10 days to make.

The Closing Disclosure Form brings together all of the costs of the loan transaction in one convenient place. The Closing Disclosure form must be given to you at least three days before you close on the loan, giving you time to consider the loan and ensuring that there are no surprises at the closing. The final Closing Disclosure Form must also articulate the exact costs you’ll stand to pay for the mortgage, including costs that changed at the closing table.

The CFPB has also provided an excellent guide for walking you through the lending process, giving access to samples of the same forms you’ll be signing and explaining their significance.

REALTORS® are well-prepared to help prospective homebuyers navigate through the new landscape formed by TRID, with more than 80% of participants in a National Association of REALTORS® survey reporting that they had already received a level of training on the subject. If you have questions about TRID, contact your local REALTOR®.

WASHINGTON (April 20, 2016) — Bolstered by big gains in the Northeast and Midwest, existing-home sales bounced back in March and remained slightly up from a year ago, according to the National Association of Realtors®.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.1 percent to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February. Sales rose in all four major regions last month and are up modestly (1.5 percent) from March 2015.

Lawrence Yun, NAR chief economist, says home sales had a nice rebound in March following February’s uncharacteristically large decline. “Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest – overcame depressed inventory levels and steady price growth to close on a home,” he said. “Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.”

The median existing-home price2 for all housing types in March was $222,700, up 5.7 percent from March 2015 ($210,700). March’s price increase marks the 49th consecutive month of year-over-year gains.

Total housing inventory3 at the end of March increased 5.9 percent to 1.98 million existing homes available for sale, but is still 1.5 percent lower than a year ago (2.01 million). Unsold inventory is at a 4.5-month supply at the current sales pace, up from 4.4 months in February.

“The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,” adds Yun. “Additionally, a segment of would-be buyers at the upper end of the market appear to have been spooked by January’s stock market correction.”

Matching the lowest share since August 2015, properties typically stayed on the market for 47 days in March, a decrease from 59 days in February and below the 52 days in March 2015. Short sales were on the market the longest at a median of 120 days in March, while foreclosures sold in 50 days and non-distressed homes took 46 days. Forty-two percent of homes sold in March were on the market for less than a month – the highest since July 2015 (43 percent).

The share of first-time buyers was 30 percent in March, unchanged both from February and a year ago. First-time buyers in all of 2015 also represented an average of 30 percent.

“With rents steadily rising and average fixed rates well below 4 percent, qualified first-time buyers should be more active participants than what they are right now,” adds Yun. “Unfortunately, the same underlying deterrents impacting their ability to buy haven’t subsided so far in 2016. Affordability and the low availability of starter homes is still a major barrier for them in most markets.”

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage ticked up from 3.66 percent in February to 3.69 percent in March, but remained below 4 percent for the eighth straight month. The average commitment rate for all of 2015 was 3.85 percent.

NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says despite modest improvements, mortgage credit is still difficult to come by for many first-time buyers and middle-income households. “Reducing the Federal Housing Administration’s annual mortgage insurance premium rate and repealing its life-of-loan policy requirement would certainly expand options for more of these buyers,” he said. “These changes would save consumers money and further strengthen the FHA’s program by enticing more creditworthy borrowers to seek out FHA-insured loans.”

All-cash sales were 25 percent of transactions in March (unchanged from February) and are up from 24 percent a year ago. Individual investors, who account for many cash sales, purchased 14 percent of homes in March, down from 18 percent in February and unchanged from a year ago. Sixty-six percent of investors paid cash in March.

Distressed sales4 – foreclosures and short sales – fell to 8 percent in March, down from 10 percent both last month and a year ago. Seven percent of March sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in March (17 percent in February), while short sales were discounted 10 percent (16 percent in February).

Single-family and Condo/Co-op Sales
Single-family home sales increased 5.5 percent to a seasonally adjusted annual rate of 4.76 million in March from 4.51 million in February, and are now 2.6 percent higher than the 4.64 million pace a year ago. The median existing single-family home price was $224,300 in March, up 5.8 percent from March 2015.

Existing condominium and co-op sales rose 1.8 percent to a seasonally adjusted annual rate of 570,000 units in March from 560,000 in February, but are still 6.6 percent below March 2015 (610,000 units). The median existing condo price was $209,600 in March, which is 4.6 percent above a year ago.

Regional Breakdown
March existing-home sales in the Northeast ascended 11.1 percent to an annual rate of 700,000, and are now 7.7 percent above a year ago. The median price in the Northeast was $254,100, which is 5.8 percent above March 2015.

In the Midwest, existing-home sales jumped 9.8 percent to an annual rate of 1.23 million in March, and are now 0.8 percent above March 2015. The median price in the Midwest was $174,800, up 7.0 percent from a year ago.

Existing-home sales in the South rose 2.7 percent to an annual rate of 2.25 million in March, and are 2.3 percent above March 2015. The median price in the South was $194,400, up 4.6 percent from a year ago.

Existing-home sales in the West climbed 1.8 percent to an annual rate of 1.15 million in March, but are 2.5 percent lower than a year ago. The median price in the West was $320,800, which is 5.9 percent above March 2015.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: NAR’s Pending Home Sales Index for March will be released April 27, and Existing-Home Sales for April will be released May 20; release times are 10:00 a.m. ET.

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